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If you are a First Time HomeBuyer in San Jose or the rest of San Francisco Bay Area, you would have most likely heard of FHA loans. But like most of the other potential First Time HomeBuyer I meet and advise, you may not be sure whether you qualify for FHA mortgage or not. Below I have mentioned some of the major requirements that you should know of:
Maximum Loan Amount – Varies by county. For Santa Clara, Alameda, Contra Costa, San Mateo and San Francisco counties it is $729.750. This loan amount expires on 12/31/2013.
Credit Score – A minimum credit score of 640 is required by most of the lenders.
Down Payment – FHA Loans are available at a minimum down payment of only 3.5%.
Property Type – As long as a house is 1-4 units, FHA financing is available. So you can get this loan for Single Family House (Attached & Detached), Town Homes, Condominiums & even Manufactured Homes. However, you need to occupy the house as your primary residence. Second homes and Investment properties are not allowed.
Mortgage Insurance – 1.75% of Upfront Mortgage Insurance and 1.25% of annual Mortgage Insurance (Paid monthly) is charged by Federal Housing Administration. The former may be included in the loan amount.
Impound Account – With FHA Loan you have to mandatory pay your property taxes & home owner’s insurance with monthly mortgage payment. The lender keeps the amount of Property Taxes & Home owner’s insurance in an escrow account also called impound account and makes payment to the county office and your insurance company when it becomes due.
Note that FHA loans are not only for First Time HomeBuyer. Even if you own a home currently or have owned one in past, you may still qualify for FHA mortgage. There are other specific requirements for FHA loan, so please call or email me for specific details if this sounds like the right loan for your new home.
If you would like more information on FHA Loan requirements, contact me at 408.615.0655 x129 or [email protected].
** Since I wrote this post FHA Up front Mortgage Insurance Premium (UFMIP) requirements have changed**